[Intl-tobacco] TFK statement: Philip Morris Agreement With EU Indicates Complicity in Cigarette Smuggling And Establishes Anti-Smuggling Measures

[robert.weissman@essentialinformation.org]

> For Immediate Release:                    Contact:
> Nicole Dueffert
> July 9, 2004
> 202-296-5469
>
> Philip Morris Agreement With EU Indicates Complicity in Cigarette
> Smuggling
> And Establishes Anti-Smuggling Measures
> Statement of Judith P. Wilkenfeld
>  Director, International Programs
> Campaign for Tobacco-Free Kids
>
> WASHINGTON, DC - The European Union (EU) announced today that, in order to
> avoid a lawsuit over cigarette smuggling, Philip Morris International has
> agreed to implement a series of necessary anti-smuggling measures and pay
> up to $1.25 billion over the course of 12 years.  For years, the tobacco
> companies have denied either that they had a role in cigarette smuggling
> or that they could do anything to prevent it.  Philip Morris' agreement
> with the EU casts serious doubt on both claims. It is doubtful that any
> corporation would resolve a potential lawsuit for over $1 billion unless
> they felt the case against them was strong.  While this agreement
> establishes some strong measures to combat smuggling, it should serve as a
> starting point for similar efforts in the United States and elsewhere.
> The agreement should be supplemented by new anti-smuggling laws and
> treaties, such as the pending Framework Convention on Tobacco Control.
>
> Cigarettes are the world's most widely smuggled legal consumer product
> (although the problem is smaller within the United States).  According to
> legal documents filed in a lawsuit by the EU in U.S. courts, one in three
> of the world's exported cigarettes - about 400 billion cigarettes each
> year - turns up as illegal contraband.  Despite the tobacco companies
> repeated denials of involvement in cigarette smuggling, news reports and
> lawsuits indicate that the companies have facilitated smuggling to
> penetrate closed markets, increase the sale of their brands by making them
> available at reduced prices, and undermine government efforts to increase
> cigarette taxes and import duties in order to reduce tobacco use. For
> years, tobacco company executives have fought cigarette tax increases and
> other tobacco control measures by arguing that they would lead to
> increased cigarette smuggling.  This agreement shows not only that the
> companies have the ability to control smuggling, but that they could have
> been doing it all along.
>
> The EU agreement requires Philip Morris to implement several measures to
> combat cigarette smuggling that the tobacco companies have said that they
> couldn't do. These include improved tracking, tracing, labeling and
> record-keeping requirements to help law enforcement determine the source
> and track the path of contraband cigarettes; better monitoring of its
> sales and distribution practices and vendors to ensure they are in
> compliance with legal requirements; and establishment of additional
> monetary penalties Philip Morris must pay if its cigarettes continue to be
> smuggled in large quantities.
>
> We applaud the European Union's efforts to combat cigarette smuggling and
> hold the tobacco companies accountable for their involvement in it. This
> stands in stark contrast to the United States. The U.S. must move
> immediately to address the problem of cigarette smuggling, which
> undermines efforts to reduce smoking, especially among children, and costs
> governments much-needed revenue through the evasion of cigarette taxes and
> duties.  The Bureau of Alcohol, Tobacco, Firearms and Explosives has taken
> steps recently to investigate and crack down on cigarette smuggling, but
> weak laws have hampered these efforts.  The PACT Act (S. 1177), which has
> passed the Senate, would significantly improve the situation if passed
> into law.  Importantly, the PACT Act would remove a significant obstacle
> to federal law enforcement action by reducing the number of smuggled
> cigarettes necessary to make interstate smuggling a federal crime from
> 60,000 to 10,000.  In addition, U.S. Representatives Lloyd Doggett (D-TX)
> and Todd Platts (R-PA) and Senator Ron Wyden (D-OR) are preparing to
> introduce more comprehensive legislation to further strengthen U.S. laws
> against cigarette smuggling.   Among other things, this legislation would
> increase civil and criminal penalties against cigarette smuggling;
> establish labeling, tracking and record-keeping requirements for cigarette
> shipments; and tighten regulations governing block sales of cigarettes.
> This bill and the PACT Act both make good sense as a matter of law
> enforcement, public health policy and international leadership by the
> United States.  They would also protect badly needed state revenue.
> Congress should quickly take steps to enact each into law.
>
> The measures to combat smuggling included in the EU/Philip Morris
> agreement should also be just a starting point for countries when working
> to pass a smuggling side-agreement to the international tobacco treaty,
> the Framework Convention on Tobacco Control.
>
>